Oil Stabilizes on Supply, Diplomacy Mix

Oil held steady as traders weighed signs of rapidly depleting US reserves against efforts by the US and Iran to seek further talks to end a war that has brought transit through the vital Strait of Hormuz waterway to a near-halt.

West Texas Intermediate ended the day virtually unchanged near $91 a barrel, roughly back to its level before peace negotiations broke down over the weekend. Washington and Tehran are considering extending their ceasefire that ends on Tuesday by another two weeks to allow more time to negotiate an agreement, according to a person familiar with the matter.

The commodity rose earlier after US Energy Information Administration data published Wednesday showed stockpile declines across crude and all major refined product categories. The world has been looking to US supplies to offset disruptions from the Middle East. Heightened export demand pushed total oil and fuel exports to the highest level ever, according to the EIA.

The key data jolted oil out of sleepy trading as investors weighed conflicting rhetoric from the White House over the war's trajectory. The conflict has reduced transit in the key Strait of Hormuz to a trickle and damaged Persian Gulf oil and gas infrastructure, exacerbating an energy supply crisis that threatens the world economy.

Treasury Secretary Scott Bessent reaffirmed that the US would not renew general licenses that allowed for the temporary sale of certain Russian and Iranian crude.

"Though the dollar and oil prices rebounded slightly, markets still seemed to be leaning quite heavily toward a constructive outcome," said Fawad Razaqzada, a market analyst at Forex.com. "That said, it still feels a touch premature to be pricing in a smooth resolution."

Surging prices for physical crude and products such as gasoline are squeezing consumers and hurting demand, with the International Energy Agency forecasting a drop in consumption this year. Some of the strength in physical markets has eased in recent days, a further sign that traders aren't currently expecting disruption to persist for months, though the Dated Brent benchmark — crude for immediate delivery — remains above $120 a barrel.

Key issues between the warring parties include Iran's nuclear ambitions and the status of Hormuz. The US military is pressing on with its blockade of the strait to curb the Islamic Republic's oil exports. More than a dozen vessels are being used to enforce it.

Iran, for its part, sees a prolonged US blockade as "a prelude to a breach of the ceasefire," said Ali Abdollahi, the commander of Iran's joint military headquarters, according to state TV.

The country has maintained control of the strait through the conflict. It could consider allowing ships to sail freely through the Oman side of the waterway without risk of attack as part of proposals it has offered in US talks, Reuters reports, citing a source briefed by Tehran.

Should escalation risks fade, supply from the Middle East may see a "tiered recovery," according to ANZ Group Holdings Ltd, the parent company Australia and New Zealand bank. Some 2 million to 3 million barrels a day were likely to be restored in the first four weeks, followed by additional volumes, analysts including Daniel Hynes said in a note.

Oil importers in Asia are feeling a deeper crunch, with Japan set to launch a second release from national stockpiles from early May, according to the Ministry of Economy. Refiners in the region, meanwhile, could be forced to reduce operations further, throttling supplies of jet fuel and diesel.

Extreme conditions in crude markets are drawing both positive and negative attention. Prediction platform Kalshi Inc. is expanding its commodities offerings. At the same time, the Commodity Futures Trading Commission is investigating suspiciously timed oil futures trades ahead of recent policy shifts by President Donald Trump related to the Iran war, according to people familiar.

Oil Prices

• WTI for May delivery was 1 cent higher to settle at $91.29 a barrel in New York
• Brent for June settlement added 14 cents to settle at $94.93 a barrel

"We still think it gets worse before it gets better," Max Layton, global head of commodities research at Citigroup Inc. said in a Bloomberg TV interview. "We're certainly not out of the woods."